Opinion

Prices of goods won’t go down, but…

With the price of petrol dropping, many are questioning when the price of goods will be falling to show the same trend.

Talking to a few others, I can only say, don’t hold your breath. Prices of services and goods will not be going down, and here’s why.

According to the Malaysian Department of Statistics (DoS), the consumer price index is up 2.7% in December 2014, with food and non-alcoholic beverages up 2.4%. Subcategories for food compared with the previous month saw an increase in chicken eggs, chicken, cucumber and kailan, among others.

And yes, even the price of kangkung was up 2.8%.

While the price of petrol has dropped to RM1.70 a litre due to the fall of crude oil prices (at time of writing, Brent is at US$52.99 per barrel), you would need to consider the entire supply chain cost dropping before asking shop owners to reduce their prices.

And that would include the shop owner asking the delivery service, and the delivery service asking the supplier. However, also note that the ringgit is also down, thus if your purchased goods are imported, chances are they will be getting more expensive.

That being said, it is also an issue to ask logistics companies. While prices of petrol are down, are maintenance costs for delivery trucks and vehicles lower or higher? And more importantly, when was the last time they raised their prices and fares?

For school buses under the Federation of Malaysian School Bus Operators Associations, it has been six years since they have negotiated raising fares. If you were working in a company that did not raise your salaries for six reviews in a row, chances are you would have left after the second year.

Plus, with the conditions of school buses as they are, spare parts may have gone out of production leading to a need to scour junk yards for parts.

Similarly, would you also ask drivers’ salaries to be cut since, well, they will be spending less? Of course not.

At the same time, if your purchases are imported goods, you may also experience a drastic rise. According to Bloomberg and an online portal, the ringgit is the worst performing currency in Asia with it being RM3.63 against the dollar.

And, as we all should know, trade of goods is done in US dollar.

According to Matrade, we imported RM649.19 billion worth of goods in 2013, a 7% increase from 2012. Among the items that saw an increase year on year worth noting were chemicals and chemical products (up 0.4%), manufactures of metal (up 1%), and of course, processed foods (up 0.1%).

So, no, prices would not be going down. However, there is a silver lining, somewhat.

Human resource recruiter Hays in their newest salary guide says 31% of employers gave a salary increment of 6% or more in 2014, with 33% expected to give the same increments in this year as well for Malaysia.

And 10% of employers will be looking to raise salaries higher than this as well. As such, there may be an equaliser to assist Malaysians cope with the higher cost of living.

Cross your fingers hoping you are in the 10% then.

There is a lot we need to do to lower the cost of living in Malaysia, and this government needs to take note. The Malaysian median salary according to DoS for 2013 was RM1,500. This means that most Malaysians in the middle are earning this much. If you have a household, you times that by two.

In other words, a median household earning only salaries is only RM3,000. I do hope that 2014’s report would show better wages. However, the government when talking about affordable housing or even any matter regarding the cost of living needs to consider this amount.

Anything above affordability of a household earning a gross salary (before EPF and Socso, and even tax deductions) of RM3,000 a month is no longer considered “affordable”, particularly when it comes to housing.

Until then, we can only hope that the private and public sector salaries can keep up, leaving Malaysians to think up how to satisfy the want for additional income for themselves. And as I have suggested and still continue to suggest, perhaps it is time for Malaysians to take out their own money from their EPF to invest for better margins. – February 3, 2015.

* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.

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